First-party fraud is a situation where the cardholder makes a legitimate purchase but later disputes the charge, falsely claiming it was unauthorized. This type of fraud, often called friendly fraud, is one of the most common sources of chargebacks. It can stem from buyer’s remorse, lack of communication, or intentional abuse of dispute policies. Unlike criminal fraud, the customer is known and approved at the time of the transaction.

To combat first-party fraud, there are various steps you can take. Being proactive with your refund policy and confirmation process can reduce friction and lower dispute rates. It’s also important to communicate clearly and regularly to help cardholders understand and remember their purchases. Reviewing your chargeback data can also help identify product lines or customer segments where first-party fraud is more common.

AltoPay can help you gather and submit evidence — like previous successful orders, device matching, and signed agreements — to fight first-party fraud. AltoPay also offers solutions to reduce the risk of these invalid chargebacks.